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Maximum-Likelihood Estimates Of Racehorse Earnings And Profitability

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  • Vinzant, Patrick L.
  • Neibergs, J. Shannon

Abstract

Thoroughbred racehorses are commonly characterized as unprofitable investments. Previous studies, grouping all racehorses together, estimate that over 80% of all racehorses in training fail to earn enough to recover the variable costs of training. However, these studies are not truly representative, because they fail to account for a number of factors affecting profitability. This study estimates expected purse earnings and profitability of claiming horses in Kentucky. Maximum-likelihood estimates of probability distribution parameters show that expected purse earnings follow an exponential distribution with a mean of $25,267. Profitability is best described by a Gamma distribution with a mean of $4,824. Of the 305 claims analyzed for profitability, 61% were profitable. The results indicate substantial financial risk associated with claiming race horses, but conclude that there are positive economic returns on average.

Suggested Citation

  • Vinzant, Patrick L. & Neibergs, J. Shannon, 1999. "Maximum-Likelihood Estimates Of Racehorse Earnings And Profitability," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 17(01), pages 1-12.
    • Handle: RePEc:ags:jloagb:14682
    DOI: 10.22004/ag.econ.14682
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    References listed on IDEAS

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    1. Neibergs, J. Shannon & Thalheimer, Richard, 1997. "Price Expectations and Supply Response in the Thoroughbred Yearling Market," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 29(2), pages 419-435, December.
    2. Neibergs, J. Shannon & Thalheimer, Richard, 1997. "Price Expectations And Supply Response In The Thoroughbred Yearling Market," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 29(2), pages 1-17, December.
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    Cited by:

    1. Jenna Bryant & C. Jill Stowe, 2020. "Estimated Profitability of Thoroughbred Yearlings Sold in Auctions in the United States, 2001–2018," Sustainability, MDPI, vol. 12(2), pages 1-13, January.
    2. Emily J. Plant & C. Jill Stowe, 2019. "Is Moneyball Relevant on the Racetrack? A New Approach to Evaluating Future Racehorses," Journal of Sports Economics, , vol. 20(3), pages 428-447, April.

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